Inflation concerns, Ukraine war weighing on Asian stocks

Tokyo: Asian shares were mixed on Monday as worries about the pandemic, inflation and the war in Ukraine weighed on market sentiment.

Benchmarks in Hong Kong and Sydney gained while Tokyo, Seoul and Shanghai declined. Stock exchanges in the US also ended on a mixed note on Friday. European markets on Monday were trading with gains as investors weigh the developments of the war between Russia and Ukraine. Meanwhile, international oil benchmark Brent crude declined 3.46 per cent to $116.3 per barrel.

Adding to concern over the economic impact from the pandemic, Shanghai went into a nine-day semi-lockdown. With China's economic growth already slowing, the extreme measure could worsen unemployment, sap consumer demand and further complicate already snarled global supply chains. The Shanghai Composite index edged 0.1per cent lower to 3,208.12. More broadly, the war in Ukraine and inflation are clouding the global outlook. The Federal Reserve's moves to raise interest rates to counter surging prices are another worry in uncertain times.

"Heading into the new week, geopolitical tensions and the outlook for Fed's tightening path may add some volatility in the markets. Over the many rounds of talks, it has shown that a peaceful resolution between Ukraine and Russia may be harder than expected," said Yeap Jun Rong, market strategist at IG in Singapore. Japan's benchmark Nikkei 225 slipped nearly 0.6per cent to 27,991.57, while Australia's S&P/ASX 200 gained 0.4per cent to 7,438.90. South Korea's Kospi inched down less than 0.1per cent to 2,729.58. Hong Kong's Hang Seng surged 1.4per cent to 21,712.93. The U.S. Federal Reserve has indicated it may continue to raise interest rates, as a way to curb inflation. Earlier this month, Fed officials raised their key rate a quarter-point from near zero to a range of 0.25per cent to 0.5per cent.

Meanwhile the war is adding to worries over instability, energy prices and economic slowdowns in various nations. Over the weekend, Ukrainian President Volodymyr Zelenskyy accused the West of cowardice, pleading for fighter jets and tanks to help defend his country from Russia's invading troops. Russia has said its main focus in the conflict is on taking control of the eastern Donbas region, an apparent pullback from its earlier, more expansive goals, but one which is raising fears of a divided Ukraine.